Rescinding Annual Meeting Vote

OK, a question for all of you about a decision that was motioned, voted on, and passed at our Annual Meeting.

First of all, brief notes about the Association:

* Members (Properties): 51
* Annual Meeting Quorum: 25% (13)
* Annual Meeting Attendance: 28 (17 live, 11 proxy) 55%
* Annual Meeting was properly and timely noticed (32 days in advance; ByLaws call for 30 days advance notice), and with that notice the Minutes from last year's Annual Meeting, as well as Agenda for this year's meeting were included.
* My role: Secretary / Treasurer on the Association BOD
* Special Assessments are not limited in any way or fashion in our Covenants/ByLaws. In fact, there is no mention of them, and in following Colorado law, they could be instituted by simple Board vote, for any reason the Board decides is necessary for the Association finances.

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Special Note: while the Annual Meeting has always been held physically, last year we went Zoom due to Covid. It was great, but we went back to physical meeting this year. The Meeting Notice stated, "TENTATIVE ZOOM ATTENDANCE: Please note that we have an officer who will bring their mobile hotspot device. We are hoping that we can allow out-of-town members to Zoom into the physical meeting. However, without having had a chance to test the device at the fire house, we cannot guarantee that it will work. We ask that, for those who hope to join us via Zoom, they go ahead and submit a Proxy, in case the Zoom connection does not work."

We're a very, VERY rural area of Colorado, where getting a signal is a sign of miracles to happen). The day before, I took my portable internet to the meeting site, which not only lacked any chance at grabbing data, but also offered zero cell phone reception, including texting. Immediately thereafter, an email went out to the membership letting them know that adding the hoped-for Zoom to our meeting was not possible.

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One of the problems we've had in our association is that the geniuses who first set it up hard-coded the Assessment at a firm dollar amount, with no mention of raise, in the Covenants. While we've now got a Committee who will go thru the Covenants and By-Laws to educate our membership about what could and should be changed to protect both the Association and members' pocketbooks, we currently do not have enough of a vote to raise assessments.

At the Annual Meeting, we had an Agenda Item in UNFINISHED BUSINESS, 4. Road Maintenance - Are all roads u to par at this time? If not, what would be the cost to do so? A roundtable discussion started, and in that roundtable, regular members agreed that we needed to have the new committee created to look at the Covenants/ByLaws. However, the discussion went on to say that such a committee report and the subsequent vote might take a year, which would not help the current finances of trying to support the maintenance issue. Straw votes were tossed around about how much extra we'd all be willing to pay (current assessment is $300 per property). It was noted to the membership attending that, while our Covenants and ByLaws do not put any restrictions on Special Assessments, meaning they could be created by a board vote alone, the Board was not comfortable doing so. A motion came from the floor to create a $150 Special Assessment, and it passed unanimously. The agreement was that the invoice for that Special Assessment would be submitted to folks by August 1.

Keep in mind that with a unanimous vote, the Special Assessment received 55% of the total membership.

Let's skip to 3 days later, when a Board Member who was not at the meeting read one of the emails among the board about the special assessment being added to the budget, and a new vote for budget was required. She is very unhappy about it, demanding that the vote be rescinded immediately, and we send out a paper ballot to all members asking them to vote again. Her complaints are:

1. you cannot use special assessments for road maintenance (not sure where she got that idea - from what I've read, ongoing maintenance is the one point when courts have upheld contested special assessments)
2. the special assessment was not on the Agenda (although budgeting road maintenance was on the agenda, referencing last year's annual meeting, at which time a special assessment and raise in assessment was discussed);
3. you have to have a special meeting to discuss assessments (not true);
4. The vote should not count, as people who might have come were not allowed to participate, despite a promise to set up Zoom (again, there was no promise of Zoom, but a hope that we could get it working. Again, the meeting noticed stated that Zoom was tentative, and encouraged folks to submit their proxy in its stead. And, they were notified when we discovered Zoom would not work at that location.)

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I got a call from the Board president this morning, telling me to create a new ballot and send it out, that we're going to take a vote. I pointed out that the motion has already been made and voted on, and it passed. IF he wants a change, then the Board needs to vote on one of these three options:

1. Leave it alone, re-affirming that the vote carried.
2. Send out a vote to the membership allowing them to overturn the already decided earlier vote.
3. As a Board, vote that we have decided we do not have the need for this Special Assessment, and can do fine without it. [Warning, however – if the Board turns over a vote carried by the full membership, then it is setting a dangerous precedent in telling the folks, “we don’t care what you vote – we’ll decide for ourselves.”]

With our newly elected BOD, we have 6 members on the Board - so far 2 have vote to send out the invoices, and 1 has voted the rescind the vote. I know that a second will vote to rescind (since that's the one who complained to begin with), leaving us with the two newest board members still to vote.

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OK, so for my question. First of all - am I wrong in that if we're putting a vote out to the membership, the vote would need to be for the membership to overturn the Special Assessment which was already voted on? Or am I going in the totally wrong direction here?

Thanks for your patience in reading this, and I'm hoping that someone will help me out on knowing what I'm doing is either right or wrong.

Nor is some kind of vote to rescind necessary. If needed, have the HOA attorney explain to the Board that the membership vote on the SA was invalid, period. Have the Board relay this to the membership.

Ask all to follow the governing documents and state statutes for non-profit corporations, especially the sections that address SAs.

Augustin, in Colorado, there is no specific protocol for the requirements of bringing up a special assessment. It refers you to your HOA-specific documentation, except for certain situations (which we do not meet). Our documentation has nothing about bringing about a Special Assessment.

In my opinion: Your board is making up stuff as it goes along, all to avoid the responsibility that the law assigns to the Board and the Board alone.

Was your HOA created after July 1, 1992? If so, then from the Colorado Common Interest Ownership Statute:

38-33.3-303. Executive board members and officers.
(1) (a) Except as provided in the declaration, the bylaws, or subsection (3) of this
section or any other provisions of this article, the executive board may act
in all instances on behalf of the association.

From the Colorado Nonprofit Corporation Act:
"(2) Subject to any provision stated in the articles of incorporation, all corporate powers
shall be exercised by or under the authority of, and the business and affairs of the
nonprofit corporation managed under the direction of, the board of directors or such
other persons as the articles of incorporation provide shall have the authority and perform
the duties of a board of directors. To the extent the articles of incorporation provide that
other persons shall have the authority and perform the duties of the board of directors, the
directors shall be relieved to that extent from such authority and duties."

As I wrote above, in my opinion, for an issue this important, notice must be perfect. Notice (for the vote) was far from perfect.

I think your Board all really need to bring on a HOA attorney to answer questions and help get you all on a better path. Because right now, you all are guessing instead of trying to find out what the law requires you to do.

https://altitude.law/wp-content/uploads/2020/07/CCIOA-2020-07072322xA12BD.pdf

https://altitude.law/wp-content/uploads/2020/11/07307998.pdf

Wrong; bad excuse; didn't do your homework.

The Board has a duty to ensure the well-being of the HOA corporation. If it needs an attorney (and it does, afaic), and right now, there's no money to pay an attorney, then it needs to raise the assessments.

If you all do not like this, sure, fly by the seats of your pants. But there will be no logic to what your board does, and this forum can only assist you all in making up more rules, with zero legal basis, like a group of fifth grade boys creates a club with "bylaws," kangaroo courts et cetera, and zero force of law.

I understand - trust me. I'm the one who has brought up for 3 years the fact that we need more money, and we need to put together a group to run a Covenants change through the membership, to see if we could get that super majority vote. I've been voted down on that time and time again. Last year I got yelled at for 10 minutes straight by the spouse of the board member who never comes, but is now griping about us calling for a spacial assessment. According to the spouse, there's no such thing as having had inflation in Colorado since 1997. Yeah, this is what I'm dealing with.

This year, since the Board won't vote for any extra money, and with us not having the funds necessary to do what we need to do, I at least brought up, at the Annual Meeting, us creating a committee to look into needed changes to the covenants, to include being able to raise the assessments. That led to the discussion, with, as I said before, a majority of the total membership voting to have not only the committee, but to immediately assess the special assessment.

What we've got now is that absent board member kicking back, and another board member, who voted for it at the meeting, waffling as "we don't want anyone upset". Two board members (myself and another) have voted to send out the special assessment.

So what I need to do is get the votes of the two new board members, and if they vote for the special assessment (which they did at the meeting), then we can say that the Board voted for that assessment, it's going out?

And yes - our Board does tend to just go with whatever. That's why I created a committee, and why we'll be going through our documents paragraph by paragraph to set standards for things that should have been set - again, protecting both the membership and the association. One of the main things I hope to do is set it so that the board can raise the assessment (to a max of 10% over a 5-year period), but in exchange, Special Assessments get locked to where you must have a super majority (66%) vote on it to pass it. And believe me - there's lots of other stuff to protect. Currently, our ByLaws can be changed by just a board vote to, well - change the ByLaws. Only the Covenants are protected. I'm hoping we come thru the committee with a suggestion that ByLaws must be changed by a majority vote of the membership who attends the meeting to do so. We've had board members in the past who changed them to benefit themselves - not good!

I am totally with you on trying to prevent a fiasco - and yes, Surfside is the perfect example. While we don't have the towering structure, we have roads with hairpin turns and potential downhill slides that need to be taken care of - and a fight gong on from half the board who thinks the roads are "fine - we don't need more money."

Grrrrrrrrrrrrr

Thank you, Augustin. I'll make phone calls tonight to the two new board members who haven't answered. If they'll come back with "send it out," then we have a board vote to assess it. We've got to get the roads done - we have a couple (where no one lives), that have become nearly impassable. Not good at all.

Thanks!

I don't want to come down too hard on Melody because it's clear they're trying to do things right. And the comment about cell phone signals being a sign of miracles to come gets a Like from me. :-)

But Augustin is right that logic and effort and good intentions won't always get you where you need to be. (If you can find online resources that provide training for board members, it would be worth your time to go through them. The best thing we received from our attorneys was training and unlimited free 15-minute phone calls in exchange for a relatively modest retainer - that retainer paid for itself in trouble avoided.)

I don't know that the annual meeting vote needs to be rescinded since it wasn't valid to start with (possible issue with the meeting notice) and it's not legally binding even if the vote had been properly noticed. This should be noted in the meeting minutes, though.

Even so, it's good that many homeowners seem to understand the need for a special assessment when your CC&Rs cap your assessments at $300. So you probably won't have problems with pushback - I guess that dealing with bad roads during Colorado winters helps clarify things.

The bad news is that the board will still have to approve the special assessment since that's their responsibility, and if you have some directors dragging their feet, that could be an issue. The real fix, as you noted, is to amend the CC&Rs - but that's a legal process and will need to involve a lawyer (hereabouts an amendment costs about $1000 start to finish). You can't DIY this process since the amendment needs to be written in legalese, to comply with state statutes, and to be consistent with the rest of the CC&Rs - otherwise you set yourself up for legal challenges in the future.

Except that covenants don't say squat. There is not one work anywhere in the Covenants or ByLaws about how to handle creating a Special Assessment. In the past, the issue has been brought up by the BOD (but never passed). This time, it was brought up by members at the Annual, and they wanted to vote on it, as there was more than a 50% membership present. I personally saw it as the same as any issue that was brought up and voted on an an Annual Meeting (last year we voted to change the ByLaws. The year before that we voted to change security into the ranch). But, it appears that my "seeing it" was incorrect.

At this point, without mentioning to any of the other board members what I've found today, I'm going to do teh frustrated, "fine - let's vote for it here and now with the BOD", and hope that all those who voted at the meeting keep with their vote from then (all voted for it, although the board member who didn't come has said they will not allow it, while one board member is waffling so that no one gets mad).

Hoping that we can get a Board vote to create the Special Assessment. The minutes will still show that a majority of the membership voted for it, while the Board minutes will show that, following that membership show of support, the Board voted to charge the Special Assessment.

For anyone who lives where BlueGreen Corp of the Rockies was the developer (1990s), GOOD LUCK with dealing with your Association legal documents!

A compromise, in the vein of what I think others may have suggested:
The Board can agree to use the non-valid, non-binding membership vote from the annual meeting as an "advisory vote, with no legal force. The non-valid, non-binding vote is appreciated input from members who attended the meeting. The 'vote' does not represent the views of all members or even a majority of members." Discuss this at the next Board meeting, and put this in the Minutes. This might ease the conscience of this one director, at least a bit.

I strongly advise getting rid of the committee and turning over this project to a qualified HOA attorney.

If a Board majority will not agree to hiring an attorney, then I recommend this Committee review the Colorado Common Interest Ownership Act. It has specific requirements for a HOA's Bylaws. If your HOA was built after July 1, 1992, the Act applies. The Act may also apply when a HOA is amending its covenants. Lastly, even if your HOA was built before the latter date in 1992, it makes good sense to have in the Bylaws what the statute states.

After the Committee finds itself in over its head because of all the legal-ese, then re-lobby for paying an attorney to draft the new Bylaws.

I generally oppose decision-making by committee anyway. First, they do not know the law. They'll end up making suggestions based on what feels good and compromise without a legal basis. Second is because the Board has the final say-so, and committee members who are overridden get frustrated.

Sounds terrific and like you all are in fact way on top of this, doing exactly what best practices require. I do not think you personally (meaning MelodyM2) even need this forum's ideas and suggestions. Though what I call "reality checks" are something for which even I will start a new thread from time to time. It's easy to lose perspective, and many of the long-timer posters here can give it.

You are welcome.

KerryL1 makes an excellent point, of course. The Board could do an "action without a meeting," as long as the Board meets the requirements of the Colorado Nonprofit Corporation Act. See the latter at 7-128-202 of https://altitude.law/wp-content/uploads/2020/11/07307998.pdf . But for full transparency and 'best practices,' it's better to put this on the agenda of the next board meeting; send notice of the board meeting to membeers; have a question and comment period on the SA, where members can vent; and then motion, discuss (explaining the reasons for the SA and how the Board came to the dollar figure for the SA) and vote on the SA. Very formal. Very detailed. As transparent as possible.

Are you sure? Are you positive? Because I am pretty sure your HOA is incorporated. And I am pretty sure the Colorado Nonprofit Corporation Act applies. The Act has some interesting things to say about board meetings where the membership consists of "residential members." Like:

Colorado Nonprofit Corporation Act
7-128-203. Notice of meeting - rights of residential members
Section 7-128-203 (3) (a) (I) (A)
"... notwithstanding any provision of the articles of incorporation or bylaws to the contrary, the following rules and procedures apply to meetings of the board of directors of a residential nonprofit corporation or any committee of the board:

All regular and special meetings of the residential nonprofit corporation's
board of directors or executive committee, or any committee of the board that is
authorized to take final action on the board’s behalf, must be open to attendance by all
residential members or their representatives. The board shall make agendas for meetings
of the board, and agendas for meetings of committees of the board that are authorized to
take final action on the board’s behalf, reasonably available for examination in advance by
all residential members or their representatives. If there is no formal agenda, residential
members or their representatives are nonetheless entitled to a general description of the
purpose of the meeting and the subject matter that will be discussed."

Want to learn more? Start by reading every section of the act that speaks about "residential members."

This is like shooting fish in a barrel.

Seriously, I know MelodyM2 is doing her best with a bunch of not-very-sharp folks.

PS - did I mention that the books were several hundred $$$ off, and the board member being paid for contracting services was the Treasurer?

Yeah, that will bring up a few more protective changes we want to put in our ByLaws. One of the first things I did as Treasurer, after I pre-audited the books and turned them over for a full audit, was to have the new Board create a Finance Committee, of which our Treasurer is NOT a part, whose job it is to make sure that the books are kept transparent (including monthly reconciliations, quarterly budget-to-date reports, etc.). And if I have an reimbursements due to me (postage, things like that), then those receipts are turned into the Finance Committee for approval before I can get such reimbursements.

We are cleaning up - I promise.